EU-China investment deal likely this week, officials say

Beijing to open its manufacturing sector to EU companies, plus construction, advertising, air transport, maritime services, telecoms and some cloud computing; but legal texts to accompany the agreement could take months, so it may not be implemented for a year

by Jan Strupczewski
EU-China investment deal likely this week, officials say
European Commission president Ursula von der Leyen takes part in a China-EU conference earlier this year. The EU looks set to sign an investment agreement with Beijing this week, sources in Brussels have revealed. Photo: Reuters.

China and the European Union are likely to clinch a deal this week that would give EU firms better access to the Chinese market, improve competition conditions and protect EU investment in China, European officials have revealed.

Talks on the investment deal began in 2014, but were stuck for years as the EU said China was failing to make good on promises to lift curbs on EU investment despite a pledge to open up the world’s second largest economy. 

But tensions in trade relations between the United States and China may have helped change the Chinese position and bring about a deal between Beijing and Brussels, officials said.

"The talks are about to be concluded. It's looking good. There are only some minor details left which need to be hammered out," an EU official with knowledge of the talks told Reuters.

"As things stand now, the political agreement between the EU and China will be sealed on Wednesday." 

Other officials close to the talks said that under the deal China would open up its manufacturing sector to EU companies, as well as construction, advertising, air transport, maritime services, telecoms and, to some extent, cloud computing.

Legal texts, ratification 'could take a year'

"We get much better market access and the protection of our investments in China. Better market access is something we have been working for for many years, and the Chinese have made quite a big step towards us," a senior EU official said.

Talks on investment protection, however, are likely to continue next year and be concluded later, according to an agreed timeline. 

If there is political agreement on the deal on Wednesday, its transposition into legal texts could take several months. Together with the ratification process, that could mean it will be about year before it is implemented, officials said.

Chinese officials could not be reached for comment. 

The negotiations have been conducted by the European Commission, which handles all external trade issues for the 27-nation bloc, with the aim of getting the same access for EU firms that Chinese companies already have to the EU market.

The investment agreement also prohibits forced transfer of technologies by EU firms that establish themselves in China, and contains measures to discipline Chinese state-owned companies when it comes to competition on the Chinese market and rules on the transparency of state subsidies to Chinese enterprises.

Forced labour

Under the agreement, China will also pledge to subscribe to the International Labour Organisation's rules on forced labour.

China wanted access to the EU's energy market, but given sensitivities over national security, the Commission offered Beijing access to only a small part of the renewable energy sector, and only on a reciprocal basis, the officials said.

Ambassadors of EU governments in Brussels discussed the agreement on Monday, and no country had any major problems with it, the officials said. 

Poland suggested the EU should wait to discuss the deal with the new US administration of President-elect Joe Biden, they added, but other countries did not share this view.

'Partnership' with ASEAN

Meanwhile, at the beginning of this month the European Union and ASEAN – the group of 10 southeast Asian countries – agreed to upgrade their relationship to a strategic partnership, current EU president Germany revealed.

"As close economic partners, we will stand up for safe and open trade routes and a free and fair trade," German Foreign Minister Heiko Maas said after a virtual meeting with his counterparts from the EU and the Association of Southeast Asian Nations (ASEAN). 

"Together, we represent more than a billion people and almost 25% of global economic power. Together, we have a strong voice in this world," said Maas, who gave no specific details on what the strategic partnership would entail.

ASEAN groups Brunei, Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Indonesia and the Philippines. 

The EU has 27 member states.

In November, the 10 ASEAN nations joined China, Japan, South Korea, Australia and New Zealand to form the Regional Comprehensive Economic Partnership (RCEP) - the world's largest free trade bloc, accounting for nearly a third of the global population and about 30 per cent of global GDP.

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